How many times has price missed your entry by 2 pips? Ever been stopped out by 2 pips and wished you had entered at the back of your zone instead of the front? Here are a few suggestions to help avoid this.
From a level like 16400 I might deduct 5/10 pips for any early turn and then half the spread to give me the mid price as it appears on my charts, so my entries are either:-
16394 which is -5(-0.5xSpread)
or
16389 which is -10(-0.5xSpread)
Which of these I use and whether I take them from the front or back of my trading zone depends on a few more factors:-
Trend trades and bounces off a formerly flat level e.g. bucket bottom or fractal tend to suit the front of a trading zone and the +/-5(+/-0.5xSpread) set up.
Counter trend trades and bounces from levels where price was V shaped are likely to go deeper into a zone so the back of the range would be more appropriate.
Counter trend trades and bounces from levels where price was V shaped are likely to go deeper into a zone so the back of the range would be more appropriate.
Similar to the above, price action and momentum on the final approach is also a good guide as to how deep price may penetrate.
Finally I will generally place an order earlier on levels from a higher timeframe. As I have already said in this blog you will often see price reverse 10-20 pips short of a daily level.
Profitable trading is a result of repeating a successful method over and over, planning your entries is an important part of that.
The distribution of orders means that price will rarely bounce to the pip, but there are a number of variables at work here so I suggest testing these principles out to find out what works for you best.
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